SimiGon Limited – Final Results

SimiGon Ltd (LSE: SIM), a global leader in simulation and training solutions, is pleased to announce its audited full yearresults for the year ended 31 December 2018.

Financial Highlights

• Revenues increased by 16% to $5.03 million (2017: $4.34 million)
• Gross margin increases to 81% (2017: 78%)
• Operating loss decreased by 21% to $0.76 million (2017: $0.96 million)
• Adjusted operating loss (excluding doubtful debt provision) decreased by 68% to $0.31 million (2017: $0.96 million)
• Net loss increased by 6% to $1.01 million (2017: $0.95 million)
• Adjusted net loss (excluding doubtful debt provision) decrease by 41% to $0.56 million (2017: $0.95 million)
• Basic and diluted loss per share of $0.02 (2017: loss per share $0.02)
• Cash, cash equivalent, short term investment and deposits of $6.00 million as at 31 December 2018 (2017: $7.79 million)
• Trade receivables increased by 47% to $2.57 million (2017: $1.75 million)

Operational Highlights

• Simigon has continued to illustrate its ability to capture new business and significantly expand product capabilities in core defence-related market:
  –  Awarded additional maintenance and support services contract for the sixteen T-6A Level 5 Flight Training Devices (“FTDs”) with the United States Air Force (“USAF”);
  –  Multiple contracts to provide USAF with Virtual Reality (“VR”) Aircraft Technician De-icing Simulation Based Training;
  –  Secured additional work scope for Lockheed Martin’s UK Military Flight Training System (“UKMFTS”);
  –  Won follow-on contract with the Federal Aviation Administration in support of civilian Unmanned Aircraft R&D.
• Continued to support major military flight training programmes including:
  –  The USAF Air Education and Training Command Undergraduate Remotely Piloted Aircraft Training (“URT”);
  –  Completion of major development and delivery milestones in support of Lockheed Martin’s UKMFTS program;
  –  Provide software and services as part of long-term relationship with a strategic European customer.
• Completed multiple delivery milestones for the $2 million Israeli Air Force (“IAF”) F-16 Maintenance Trainer Program (IAF F16 Maintenance Trainer) contract announced in June 2016.
• Released SIMbox version 5.7 in August 2018, providing many new platform capabilities including expanded Virtual Reality (VR) support and significant “under-the-hood” performance upgrades.
• Awarded $1.1 million dollar contract with the IAF for T-6A aircrew training devices.
• Expanded its long-term relationship with an existing European customer (the “Customer”) and has signed a contract valued at $0.92 million for the use of SIMbox in the additional programs across the Customer’s organization.

Post Period Events

• Secured additional $0.85 million contracts in aggregate with key European to provide licenses, maintenance and support services for the Customer’s simulation training centers.
• Signed a Blanket Purchase Agreement with the U.S. Department of Defense Enterprise Software Initiative to establish agreed pricing and processes for government customers to purchase the Company’s products and services.
• Secure additional year of software and hardware warranties and support services for the United States Air Force T-6A Level 5 FAA Compliant Flight Training Device, valued up to $1.41 million over the next twelve month period.

Mr. Ami Vizer, Chief Executive Officer of SimiGon, stated: “We are pleased to report higher revenues for 2018 as compared to the prior year, together with an improved gross margin and a reduction at the operating loss level. Our true success is the strong foundation we created for future growth and return to profitability.   

The Company has been executing its strategy to deliver program milestones of long-term strategic contracts and continue to develop tactical positioning in the market as a leading technology provider. We have entered 2019 with more clients, more partners, stronger technology and greater utilization of our SIMbox technology across more domains than any other year in our history. SimiGon’s ability to identify new markets and their need for cost effective training is exemplified throughout the Period in several programs, such as the multiple SIMbox-based Virtual Reality Aircraft Deicing Simulator (“S-VADS”) provided to the USAF. 

Though 2018 was one of our strongest product delivery years, the on-going transition to a SaaS model impacted our financial performance as license revenue is now spread over 5-12 years. As mentioned on the Company’s previous trading update, the impact of this migration to a SaaS model can be demonstrated by the fact that license revenue is reduced by 85% which in turn impact short term yet, I expect, will improve the long-term financial performance of the Company.

I am very proud of our team and our ability to adapt to changing market trends. Our growing footprint in the training and simulation industry is propelled by leading, game-changing technologies, diverse global partners, and the need for advanced training systems and positions the Company well to deliver improved financial performance in 2019 and beyond”.